Real estate still a good investment

Real estate still a good investment

By MYKE THOMAS, SUNMEDIA

When talk turns to real estate, the word ‘investment’ follows immediately.

But, a new home should be considered a place to actually live in — a sanctuary in which to keep families safe, happy and warm; a secure place where you close the doors on the rat race.

Certainly you want to build up equity in your new home and history shows you will, as you pay down the mortgage and see the value of the home increase over the years.

A home’s equity should not, however, be considered a bank account with no limit on withdrawls to grab quick cash every year to pay for the trip to Hawaii or a new car.

Nor should it be considered to be your only retirement savings plan.

Certainly not in the short term.

Given today’s economy, it is difficult, if not dangerous, to think a home purchase is going to show big returns in just a few short years.

It may have been true five or six years ago, but definitely not now.

Is a new home purchase a good investment?

Yes.

As long as you understand the true meaning of investment.

A number of reports have been issued lately saying buying a home no longer gives as good a return as investing in the stock market, or in bonds, or gold or dollar exchanges or tattoo parlours in San Francisco (OK, I made up that last one).

Actually it depends on how the day is going at the TSE or Dow Jones or whether or not a biker convention has rolled in San Francisco.

Regardless, you can’t live in a stock market or a bond market or underneath a bunch of gold certificates or in a tattoo parlour in San Francisco (especially if it’s full of bikers).

When you invest in commodities you take your chances and while the odds are better than playing VLTs or Lotto Max, they’re not as good as making the decision to buy a new home and keep it over the long term.

Which is where the reports and stories about real estate being a bad investment miss the point, because most of them consider housing to be a commodity, failing to take into account shelter is one of life’s nessesities.

Comparing housing to commodities is not comparing apples to apples, unless your job is flipping real estate, then you take your chances and play the odds or maybe influence them.

Did you ever wonder if the authors of those reports (many are real estate investors) are preaching housing doom and gloom because they have an agenda?

Tell people real estate is a bad investment so they won’t buy houses, so prices go down, so it’s cheaper for the real estate investing authors to get into the market.

Nah, couldn’t be, could it?

It’s a mute point when you consider your home as a place to live.

Myke Thomas is the Homes editor and can be reached at 403-250-4324 or myke.thomas@sunmedia.ca